Thank you so much for joining us for the next section, session. Next up we have BorgWarner, a global leader in powertrain technology, that ranges from not just ICE and EVs but also a very strong hybrid portfolio, as well. In 2021, the company had a very prescient view of where powertrains were going and started its Charging Forward plan, and has made real significant progress on that, which we'll get into in the Q&A. The market remains almost permanently skeptical, and we think that should change over time on the stock because I think, you know, as you guys, you know, set up the business in Charging Forward, we'll succeed in almost any way powertrain tech goes in the coming years. Execution has been wonderful, as well, so we think there's a tremendous opportunity here at BorgWarner.
Today we're very happy and honored to have Fréd Lissalde, BorgWarner's President and CEO, and Patrick Nolan, who I think you guys all know very well, Vice President of Investor Relations. We really appreciate you guys coming today. There's a lot to talk about, so we're gonna try to get through it in the next 38 minutes. I guess just the first kind of start, sort of big picture. You know, vibes at the beginning of the year, you know, kind of people are a little bit skeptical. We're a little bit optimistic. I'm just curious, you know, how you see things shaping up. And very specifically for you, you know, powertrain does matter to some extent.
There's been sort of cutting of EV volumes, right, or pullback in EV volumes and launches, and it doesn't seem like there's necessarily the subsequent return, or increase in ICE volumes, right? So, you know, are you seeing that in forward schedules, and do you think that's potentially an opportunity? So sort of broadly, you know, how are you thinking about volumes, and then how are you thinking about this potential sort of mismatch of what's going on in this pullback in EVs and potential upside in ICE vehicles?
So we guided 2024 with China and North America pretty much flat year-over-year, and Europe down a little bit. We're seeing Europe closing some of the backlog gap in Q1, but it's difficult to see how this is gonna flow through in the rest of the year. From an EV perspective, and we'll come back to the portfolio because for us, we've set up a portfolio that is resilient, as you said, no matter what. We started seeing our combustion product going back up last year when EV was slowing down, so I think that was a good proxy. If you believe that the market is at 89 million or 90 million cars, if one goes down, the others should compensate, and we've started seeing that last year.
I mean, have you? I mean, so in the schedules for some of the manufacturers, it doesn't sound like they've quite done that. Are you actually starting to see that one that replacement of ICE volume for lower EVs?
We started to see that in the 2023 numbers. I think, as you look at the guide and what's ensued in most of the production forecast this year, is that you're right, that associated offset that if we're gonna be at a certain level of volume and E does come slower, as some are speculating, that associated offset on the combustion side's not predicated in some of those production schedules yet. So I think we're gonna have to wait and see how that plays out over the course of the year. Now, the good thing is, if those combustion volumes are higher, it's gonna be on programs that are already in production, right? So that'll benefit those that have the strongest share on those products.
Great. And one of the other sort of potential good guys here is the hybrid volume sign, like they're gonna be higher, and there's a lot of your customers are leaning into those.
Mm-hmm.
You know, what are you seeing on sort of volume forecasts there, and what is sort of the net benefit on hybrids to you versus ICE and EVs?
So if you take a step back, 80% of our revenue is on combustion, right? The rest is on EV and hybrids. If you look at the content opportunity per vehicle in combustion, we have about $550 per car. And in hybrid, we would have all the combustion business coming in, slightly at a lower level, maybe $450 per car, because you don't need the transient behaviors of combustion powertrains. It's, it's done with hybrid. But you would get another $2,100 per car of E product going into hybrid, right? Our E product has been built so that it is fungible between BEV and hybrids. It's the same motors. It's the same power electronics, inverter, transmission, etc., etc. This hybrid discussion that has accelerated over the past six months, I would say, is very North American. Outside of North America, hybrid has always been part of the electrification strategy.
In China, 37% of the new energy vehicle that have been produced and are produced now are hybrids. Our portfolio, the $1.9 billion of light vehicle 2024 revenue, 40% is hybrid and 60% is BEV. So, again, we have built a portfolio that is growing with the electrification of powertrain. And so far, we haven't seen any technological any other technological means to decarbonize mobility than electrifying powertrain. I didn't say BEV. I said electrifying powertrain. And that's what we've created with Charging Forward.
So I mean, that's an interesting statement, electrifying powertrain. Does that mean that, you know, fuel cells, which aren't really in the mix in any significant way right now, could be an opportunity for you, you know, over time as well?
Fuel cell, we believe that fuel cell may be in long-haul trucks. But if you look at the well-to-wheel efficiency under the premise that you need green electricity as well as green hydrogen to move the cars with no carbon emission, the efficiency between an electrified powertrain and a fuel cell is very, very different.
Got it. Okay. And once again, I think your volume assumptions might be a little bit on the conservative side. If there were upside, you know, and let's say that, you know, global volumes were up 2%-3%, as opposed to, you know, flat to slightly down, what kind of incrementals sort of at a company-wide basis and maybe, you know, segment basis should we be thinking about, you know, if that good guy actually happens?
Yeah. So I think this is one change that's different from what we've said the past couple of years, what we've been saying now. When we were having conversations about our incremental the past couple of years, we were saying, "We're gonna increment mid-teens," but that was before factoring in our increase in our run rate.
Mm-hmm.
Now our messaging is that and how we're running the business is that we wanna deliver a mid-teens incremental on an all-in basis. That means even as we're increasing our R&D spending to support our growth on the electrification side, we wanna deliver a mid-teens incremental. And that in that guide this year, you can see that. We're incrementing at a 15%-17% incremental on an all-in basis when all of our growth is coming from E on the foundational side. Now, as if you do see production come in higher, you should be able to increment at that same kind of mid-teens incremental based on that higher production. But most importantly, as you look forward, whether or not it's 2024 or beyond, the idea is if it's higher combustion volumes, you increment mid-teens. If it's higher hybrid volumes, you increment mid-teens.
If it's higher BEV volumes, you increment mid-teens. So the onus on us is to control our costs to what those new volume environments are gonna be. We can't give ourselves the pass just on the costs because we have this near-term uncertainty here. We have to manage our costs to deliver that incremental margin.
So, what is changing in the cost and the management of the business that's allowing you to kind of X out that, but you know we have the R&D investment? I mean, it sounds like the core business is operating. That's kind of what we're hearing in other parts of the value chain. The core business is operating and you're executing right now. It's not just, you know, happening better than people are realizing. What, what's changed?
Well, the first thing that has changed is that BorgWarner has scaling E products. We're gating this year at $2.65 billion at the midpoint of our guide for E products, BEV and hybrids, including battery commercial vehicle. So the structure of what we've booked at 15% ROIC is starting incrementing as the volume grows. It's pretty much as simple as this.
And then the second part is just the bravery to control our costs, right?
True.
We need to adjust that spending based on what the new volume environment could be for each of these individual platforms and make sure that we're controlling our R&D spend, controlling other aspects of our costs that goes along with it.
One of the things that's been a positive development, and you guys have gone after this, so it doesn't once again, these things don't just happen, is commercial recoveries and discussions with automakers have been a little bit more fruitful than they have in the past, given some volatility in schedules, right? I mean, it's not, you know, it should happen. You're just curious. Things are kind of normalizing right now, if you call it so normal. Things are normalizing a bit.
if some of those discussions get a little bit tougher and we go back to sort of normal, you know, 1%-3%, you know, price downs, but then also sort of in addition to that, if EV volumes are lower than expected and you have programs where volumes are missing by 50% or, you know, large, large swaths, you know, is there some kind of volume guarantee, and could that be sort of a step up in some of the commercial, you know, discussions where you could get some recoveries or, you know, or, or returns for your, your, your investment that you?
Mm-hmm.
Wouldn't normally have those kind of gaps in schedules versus planning?
Yeah. So let me take it in a couple of different buckets, right? So on the inflationary side, you're right. We've started to see some pockets. You're starting to see some moderation. Some areas are seeing pressure. On a gross basis, we think inflation is more or less a push this year, and we're managing our discussions with our customers to kind of hold us, in terms of pricing. Is it really purely to inflation? On the aftermarket side or the annual price downs, what's interesting is even the past couple of years, we were giving our price downs, right? The inflationary discussion was almost a different part of the ledger. So we were giving our typical price downs, which for us run in that 1%-1.5% range, and we still think that continues going forward.
Did you wanna talk about this?
Yes. From a volume volatility standpoint, the best thing is to install flexible manufacturing, having motors that run on a line that serve 10 customers. That's what we do. We insist now on having volume-based pricing because it's very difficult to forecast. And so when you have a volume shortfall in year N, let's pick a number, 20%, you renegotiate the pricing for year N + 1. When you have a volume shortfall of 90% in year N, renegotiating a price increase doesn't really get you anything. So we are negotiating a lump sum. But we have volume-based pricing, especially on E products, because it's very difficult to forecast, and even the OEMs have difficulties to forecast. We have some good example in this country too.
Got it. So it sounds like it's normalizing a bit, but there's still a sensitivity from your customers to where things are major shortfalls to work with you, because that's of their purview of their products.
Mm-hmm.
So they haven't ripped that away. That's still in force.
Mm-hmm.
In a big way. On E products, right, I think you guys are looking in 2025 of having about $4.5 billion in revenue, which is a big step up, over time, over the next two years. What gets us there? You know, how much risk is there, and/or, you know, how much opportunity if all of a sudden hybrids take off in North America, you know, more than people are expecting?
So, as you alluded, the two new product question is very difficult to forecast, so we're not gonna forecast. We're focusing on 2024 and focusing on what we can control, incremental on the additional sales and launching our product the right way. We're launching about 60% of the products that we've announced to you guys. I think we've announced 39 wins on E products. We're launching 60% as we speak. So the timeliness of the launch and also the take rate of the cars themselves are gonna be critical to the 2025 revenue. There is one bucket of our E products that accounts for about $750 million, which is the commercial vehicle battery packs. And here, the dynamic is different because could we make more, we would sell more, and we're putting capacity in place right now.
We are going to have 3x more capacity at the end of this year that we had at the end of last year. That has a different dynamic where it's more predictable, and we could sell way more if we could make way more, and we're gonna make way more soon.
So as we get to, let's say, the I think you guys have talked about this for 2025, getting close to $4.5 billion. In profitability of E products eventually, is there the potential for it to be similar to corporate averages or potentially maybe even higher, you know, in some ways, right? You could argue just, you know, given the nature of the product, it could potentially be higher, particularly because you're getting that more direct crossover to commercial vehicle business than you might on the I side. You might correct me if I'm wrong on that.
Just a couple of things. So, as it relates to the 4.5-5, we can't control what the customer's volumes are gonna be.
Okay.
We've done our part, right? We've booked.
Okay.
The programs, and we'll ultimately see what the volume turns out to be.
Okay.
But I think what's more important than even absolute margin level for E now is that we're pricing the business on the same return on capital, and if the capital intensity is similar, which it is, steady state margin to be similar. But I think more is more important than the absolute margin where we are today is as we move forward, as incremental margin comes into the company, delivering that mid-teens incremental regardless of where that revenue growth comes from, whether or not it's BEV, whether or not it's combustion, whether or not it's hybrid, hitting that conversion, irregardless of the source of that revenue growth, is key to getting the ongoing margin improvement for the company.
Okay. One of the other big things that's going on in the market lately is China is on fire from a production standpoint, and some of that is being exported. So I'm just curious if you could talk about your current position domestically, you know, in China and with, you know, the Chinese partners that they may be exporting and using you sort of as a sort of local supplier as they go overseas, or if there's risk that you might see some homegrown suppliers supplant you or become more competitors from China over time, which, you know, North Americans have gone global with their supply base. Japanese have. The Europeans have. I mean, how do you kind of fit in sort of their view.
Mm-hmm.
Of a, you know, domestic supplier and potentially an international supplier?
So for BorgWarner, all in, our business in China is made 70% with the Chinese carmakers. For E product, actually, pretty much 50% of our E product is made with the Chinese in China, and 95% of that is made with the Chinese carmakers, the BYDs, the NIOs, the Changan, the Cherys, the Great Wall, you name it. So we've been present in China for a long, long time and being one of the first ones supporting the Chinese carmakers, getting off the ground with EVs and hybrids, actually. Again, in China, 40% of the NEV vehicles are hybrids and 60% BEV. When Chinese carmakers start thinking about exporting, they lay the focus about making sure that they're compliant from an IP perspective. And the tendency is that, especially on powertrain, they tend to work with Western suppliers when it comes to exporting cars.
When it comes to potential localizing of production, I think it's a little early to say, but being their key powertrain supplier in China puts us in this position to also support their localization plan in the Western world. Actually, if you look at the alliance that we signed with BYD on the FinDreams battery packs for commercial vehicle where we are going to be their manufacturing arm outside of China, it is at a very small scale of a niche commercial vehicle battery pack, not a bad proxy, not a bad example.
So your early signs are that you're flying under an international flag as opposed to a U.S. flag for those companies, right? I mean, there's not a move. I mean, they're happy to go global with you is what you're saying from the early read so far.
I don't see the color of the flags so far.
There you go. That's helpful. There's a lot of, you know, consternation about potentially insourcing as we, you know, electrify, and the potential for more vertical integration. You know, that's sort of been a bear argument against your stock and your story for a long time. But it seems like that's, you know, not really playing out, you know, if at all. Do you see the, the sort of the incumbent and then the incoming EV manufacturers as potential competitors in a way that, you know, other parts of the car might not?
So I think one thing that's changed over the past few months, and there are a lot of things that haven't changed, but one thing that's changed is volatility is bringing doubts in the head of car manufacturers to do everything in-house, right? And working with suppliers like BorgWarner, where we make millions of inverters, millions of high-voltage coolant heaters, and millions of motors, is kind of a safe bet, right? And there are things that haven't changed. First, inverters, which is the motor controller in a hybrid or a BEV, is still outsourced at about 80%. Motors are outsourced pretty much at 40%.
But when people say we are insourcing motors, you need to ask the second question, "What are you insourcing?" Because if we sell the stator and the rotor of the motor and the carmakers just put one inside the other, we're very happy with that, right? Because we get a lot of the value of the electric motor. Auxiliary power electronics, DC/DC converters, onboard chargers, pretty much nothing is insourced. So that view hasn't changed over the past three-four years.
Mm-hmm.
But the volatility of the marketplace in electrified powertrain, as well as the cost of capital, is, we think, tending as well as the size of the scale that we have in E products is tending towards more outsourcing than insourcing.
Got it. Another key component of the Charging Forward plan, or one of the key components, was M&A and acquisitions.
Mm-hmm.
On the E product side. Some of that's happened, but we haven't seen, you know, maybe quite the pace that, you know, would get you to that, the 2027 targets. You know, is there anything on the horizon here? Could we see something that's big and chunky, or is it, you know, sort of a layering of technologies that you commercialize sort of in a more traditional BorgWarner fashion? You know, how do you view that acquisition target and that growth in E products?
So I think what if you take a step back, what Borg is doing well is take great technologies that enable powertrain efficiency and put it put it under the BorgWarner roof, which is financial strength and discipline, geographic diversity, and customer intimacy, and unlock value that way. We've shown it with Delphi. We've shown it with AKASOL, where our production plan is higher than the one we the one we underwrote back when we closed the acquisition. And hopefully, it's gonna be the same thing with Eldor because nowadays, the volumes of those E products are such that OEMs cannot source companies that have very solid reins and very solid financial strength. Now, the dynamic has changed.
M&A is still part of what we are looking at from a technology perspective, but we're going to take into account also, in the discounted cash flow when we look at those targets, the short-to-mid-term volatility. That's gonna have an impact on how much we wanna pay for that target. So in those times of high volatility, the convergence in pricing might become a little bit of a hurdle. On the other end, I think a lot of companies are gonna become under huge financial pressure, which might open opportunities. Long story short, we're gonna be even more disciplined than in the past and looking at it in a with lenses of very different volume scenarios. Do you wanna add anything?
No. I think that was well said.
I mean, in the acquisition, so it would probably be more focused on tech than necessarily scale. Is that a fair statement?
It's a fair statement.
Okay.
Tech and bolt-on products.
Got it. As opposed to just a straight scale.
Correct.
Yeah. I'm glad you said that.
The balance sheet's in great shape. We have bond investors here in the audience. If in the context of your capital allocation and potential acquisitions, how important is it to maintain the high-quality rating and, you know, conservative leverage?
Mm-hmm. Yeah. So take that. So I think when we think about our capital allocation, I think it starts with two things first.
Okay.
That is, from a balance sheet perspective, we wanna be on a gross leverage standpoint right around 2x. I'd say, as I look at the balance sheet today, I'd call that a solid check.
Yeah.
Second, from a capital allocation standpoint, is liquidity. We wanna make sure we have roughly 20% of revenue to manage through cycles because we don't wanna be cutting back CapEx, reducing R&D spending, or frankly, cutting our dividend as we go through a cycle. So we model out a kind of great recession type of downturn for multiple years and make sure that we have ample liquidity for that. And when I think about liquidity, it's cash on the balance sheet plus our revolver capacity.
Right.
As I look at that 20% liquidity standpoint, also, I'd call that a check.
Check, yeah.
So when you think about capital allocation beyond that, it is a question of our free cash flow generation, which for us is an excess of $500 million a year. What are we gonna deploy that capital towards? Well, the dividend we view as a kind of fixed commitment. It's something that we don't wanna have to move up and down with cycles. To the extent that that changes, it needs to be something that can be sustained. Then, as John asked us about, inorganic investments, which we're gonna look at and be discerning and be pretty discerning on what we're looking at. And then in the absence of near-term M&A, we'll obviously not looking to build excess cash on our balance sheet. We'll look to deploy capital to shareholders. And we've done that over the past several years.
You saw us buy back $177 million of stock or roughly 2% of the stock in Q4. Since we completed Delphi, we've done $633 million of buybacks. That's on top of almost $600 million of dividends since 2020 and the spend proceeds for shareholders. So.
Yeah.
We like to take a balanced approach, but I think first and foremost, it starts with making sure I'm checking the leverage and checking the liquidity side on the balance sheet.
That's helpful. Thanks.
Just maybe on that, I wanna get back to R&D in a second. But, on Wolfspeed, you guys sold down some of the stake there. Was that? I mean, what, because it seemed like when you first bought in, that it was kind of gonna be strategic and pulled closer, but you've sold down. What was the rationale for the in-and-out there?
The rationale was to secure silicon carbide capacity corridor and helping them with their convertible note. But the strategy was never to be a long-term investor in any other strategy company. We.
Okay.
We are, and we've sold those notes in.
That's Q4.
Yep. Okay. So that was never gonna be a long-term investment. That's really just to get them helped.
Was never the strategy.
Get them ramped up, see capital. Okay. Back to R&D. You know, Pat, you made that interesting, you know, comment about, you know, removing the but on the incrementals. You know, as you think about R&D spend, are you achieving that by pulling back dramatically on ICE spending, or is that just a rationalization, you know, across the board? And then maybe just also on the ICE side, the opportunity seems like, relative to where we sat six or 12 months ago, far greater or positive than we would have thought. You know, could there be a scenario where you're leaning into R&D and you're bringing more technology that the automakers themselves just can't afford?
You know, their hair's on fire, you know, trying to, you know, allocate capital and invest, you know, from a, you know, an operational standpoint, efficiently forget about even the capital itself, where it might make sense to lean into the R&D on the ICE business, you know, and drive a real solution for them, you know, as ICE is maybe a little bit more prevalent than people have been expecting?
So I'm gonna start with ICE.
Okay.
We don't see a lot of new ICE engines being developed around the globe. So our focus is to always find that additional 1% or 2% efficiency at our level that will bring ICE efficiency for combustion powertrain or hybrid powertrains, for that matter, for our customers. Yes, over time, our R&D as a percentage of ICE sale has come down. Do you wanna take the overall R&D question?
Yeah. I think overall R&D, I think it's important thing to know before I get into the different parts of it is our R&D is largely Application Engineering.
Mm-hmm.
The BorgWarner R&D is not, so it's much more development for products that are either in launch or you're actively pursuing. There's not a lot of advanced kind of skunkworks R&D at BorgWarner. Now, taking a step back and looking at the various products that you R&D that we spend on that. So within our guide this year, there in our original guide incorporated roughly $40 million of additional E R&D spending this year on a year-over-year basis. Now, if E continues on as we expect this year, we'll spend that. In an environment where those volumes start coming in lighter or there's less programs to pursue, obviously, we back off that. We view it as a lever to manage those costs. On the combustion side, as Fréd said, there's not a lot of new programs to pursue.
But if we see some pull on the combustion side, could we spend a little bit more on the margins for efficiency? Sure. We view these. I guess we're viewing all the costs as kind of levers that we can do to manage this incremental margin performance that we're targeting for the company going forward.
Got it. And then also on that front, I mean, IRA, I mean, there's concerns about the consumer, you know, incentives, but maybe not necessarily sort of tax credits and, and direct, you know, incentives. So I'm just curious, as you think about sort of the battery and module production, what kind of opportunity is there for you on the IRA to benefit? And do you see any risk if the IRA changes, or is that more just at the consumer level, which is where I would kinda think it would be? But.
Mm-hmm.
I'd like to hear your perspective on that.
The provision we're taking advantage of is the 45X provision.
Mm-hmm.
Which has to do with production of battery packs. We get $10 per kWh of production, not of capacity, of actual output.
Of production.
TBD, ultimately, what happens with that. I'm not gonna speculate on the political side of it. But I could tell you our customers today are very intimately aware of that incentive. So I wouldn't view that as an incentive that is certainly something all accruing to BorgWarner. It's part of that total cost of goods sold of making the pack. And if it goes away, that factors into those discussions with the customers too. Just as right now, they're very aware of it too.
But I mean, as far as the magnitude and the benefit this year, have you guys quantified what that is on a basis particularly on the AKASOL side?
We haven't quantified it specifically, but you can look at our disclosures in terms of what we have in terms of capacity last year, where we have globally 2.2 GWh of production going up to 6.0 GWh by 2025. We've given a breakdown between North America and Europe this year, which will be roughly 55% North America and 45% Europe.
Okay.
You can kinda run the math that way.
Pretty good answer. Thank you for that detail. You know, we've got seven minutes here. Is there any questions in the audience? I have one right here.
Hi. Hey, guys. Wanted to ask on Ford vehicle, if you look at EV versus ICE versus hybrid. You talked about hybrid. It seems like there's moving parts. Your ICE component of that, I think, is lower, but then you've got, it sounds like, significantly more on EV. Like, take your median vehicle or overall exposure.
Yeah. You can find that on, on the IR page of borgwarner.com. But simply said, on. In content opportunity for vehicle is $550. For hybrids, it's $2,100 of E. $450 of combustion. A little lower. For example, on a hybrid, we would need a VTG turbocharger that optimizes the.
259.
So pretty much the same BEV versus hybrid for us.
That's a pretty good setup. Maybe so on the on that hybrid side. And then I got one last question. If you think about, you know, hybrids, I mean, mostly people think about Toyota, you know, and, and Prius. But if you look at sort of your, your hybrid customers, you've got companies like GM. I'm not saying they're your customers yet. I'd love to hear what you'd say. But GM saying it's, you know, it's, it's gonna be coming back into the U.S. market with hybrids. What are you seeing who are your biggest customers on, on, on the hybrid side, and, and what is the opportunity? 'Cause my understanding is it's, it's not so much Toyota. It's the folks that would actually be fleet potentially flexing up dramatically.
Mm-hmm. I don't think we've disclosed the key customers on hybrids. But if you take the keiretsu out, we sit on BEV. We work on with the seven biggest BEV maker out of 10 in the world. And on hybrid, I guess it's pretty much the same number. We have to run the math. But would you wanna add something here?
The thing I would add it to is I would look at our geographic split too, John. If you look at our light vehicle e-products business today, it's about 45% in China. We have 15% in North America and then the balance in Europe. So if Europe and China are the biggest portions of our light vehicle e-business and that business is 40% hybrid, it means our biggest hybrid customers today are in China and in Europe.
Got it. That makes sense.
So now, since the buzzword is gonna be hybrid, hybrid, hybrid, be careful about what hybrid means. 'Cause I've heard people saying a start-stop is a hybrid. In our definition, no, it is not a hybrid. You've got hybrid powertrains that would propel cars in an electric mode for about. Hybrid cars that propel cars with an electrified mode for 150 mi, okay? Those are not the same animals, and they are not regulatory pressure convergence, right? We are heavier on the high-voltage plug-in full hybrid or range-extended EVs that will propel the cars for more than 50 mi. So back to your question, the 2,100e portion of the hybrid would be more into the advanced hybrid, which I would call real hybrids.
Not the mild start-stop, not that.
Not the mild start-stop. You need to move up the voltage in order to really make a difference from an efficiency of a hybridization standpoint.
So in the last few minutes, if we think about this, you know, on your stock, you know, for a while, you know, there was a hey kind of hearing, "Okay. Well, you know, that's great. Now they're moving faster than EVs. But EVs are flagging and not gonna be as strong as people were expecting." You know, so, you know, that's not good. So I mean, it kind of almost feels like you guys are positioned to, you know, succeed, whichever way the powertrain ultimately goes. And if it goes from ICE to hybrid or ICE to EVs, it's a relatively similar benefit, right, as far as content. You know, it must frustrate you. But I mean, as you think about this and the stock, what do you think people are really missing in the stock?
Because clearly, there's tremendous skepticism out there. And I think as we listen to the story, there maybe shouldn't be. But what is your take on the bull bear on this, and what would you tell investors?
I would say two things, and you would chime in. First, the product portfolio is made so that it is resilient to whatever powertrain architecture grows and is resilient across the three regions. And shorter term, we wanna convert mid to high teens on wherever the additional revenue comes from. Those are the two things that I think we want you to remember, which we think is gonna create value.
And I think investors wanna see us actually execute towards that. I mean, we can tell you we're gonna execute mid to high teens, regardless of where that growth comes from. But I think this year is a very important proof point for us. As all of our revenue growth was coming from e-products this year, at least in the original guide, can we actually deliver that incremental margin on an all-in basis that we're guiding to? 'Cause I don't think it's a given until we actually see that, that we're gonna get credit for it. So I think we as we execute towards that, I think that helps a lot in terms of that valuation. And, it's a proof point, just like we needed to proof point on the e-products side.
We were booking a lot of business, but we didn't really get credit for it until you started to see it in the P&L. I think it's gonna be the same thing from the conversion side.
Okay. We would 100% agree. Pat and Fréd, thank you so much for the time.
Thank you.
Really appreciate you guys, making the time to join us today.